Comcast Lobbyist Admits It Helped Create Netflix By Refusing To Compete On Price

from the own-worst-enemy dept

Top Comcast Lobbyist (sorry, Chief Diversity Officer) David Cohen was a one-man disinformation firestorm during Comcast's doomed acquisition of Time Warner Cable. Cohen has a nasty habit of spearheading greasy practices -- like paying minority groups to parrot bad public policy positions to create the illusion of diverse support -- then pretending to be outraged when these connections were highlighted. Cohen also amusingly declared that those opposed to the company's merger ambitions were ignorant and unreasonable, without a single supportable fact to be shared among them.

That's why it was pretty interesting to watch such a master of spin candidly acknowledge that Comcast has only itself to blame for Netflix's rise as an Internet video powerhouse. Calling Netflix the company's "ultimate frenemy" at a recent telecom conference, Cohen admitted that streaming services like Netflix were a self-inflicted gunshot wound, created in large part because the cable ecosystem charges way too much money for its services:

"While Cohen sees Netflix as a complement to Comcast’s cable offering, he acknowledges that streaming services, especially those that offer slimmer video packages like Sling TV and Sony PlayStation Vue, could potentially be more attractive to price-conscious consumers. "Part of this is a self-inflicted wound," Cohen said. “We have made video too expensive."

A cable or broadcast executive admitting they've refused to compete on price is a rare animal indeed, and even more rare from a legendary obfuscationist like Cohen. Normally, Comcast has downplayed their slow quarterly hemorrhaging of video subscribers, while Netflix, in contrast, added 3.3 million subscribers last quarter alone. Like most cable execs, the folks at Comcast are so used to a pampered duopoly, they see price competition as a vile alien abomination, justified in part by the millions of consumers that continue to pay an arm and a leg for bloated, over-priced lineups of unwatched channels.

These executives also honestly believe their inflexible legacy empires are able to out-innovate price competition by releasing abysmal "me too" products. Products like Comcast's recently launched and widely-ridiculed "Stream" platform, which is laden with so many caveats as to make it largely irrelevant in full competitive context.

Of course Cohen also got to the modern meat of the issue, reminding attendees at one point that no matter how large Netflix gets, it still needs to come through Comcast to get to its customers:

"Cohen added while some fear that more Netflix customers means less cable customers, he reminded the audience that reliable broadband is a crucial element of the streaming service. “Remember, you can’t get Netflix without broadband service,” Cohen said. “Those are 3 million customers of our broadband service."

And that's the rub. At the end of the day, Comcast still intends to grab its pound of flesh one way or the other, whether that's by forcing Netflix to pay direct interconnection fees, or by slowly expanding the company's usage cap and overage fee trials and hoping nobody notices. Either way, Comcast will continue to do absolutely everything in its power to avoid having to compete on price for as long as humanly possible. But as they say, admitting you have a problem is the first step to recovery.

Reader Comments

More than a pound

Cohen added while some fear that more Netflix customers means less cable customers, he reminded the audience that reliable broadband is a crucial element of the streaming service. “Remember, you can’t get Netflix without broadband service,” Cohen said. “Those are 3 million customers of our broadband service.

What he didn't say is that they (Comcast, Mediacom, etc.) double the price of broadband service when the customer "unbundles" cable service from their account. So yeah, they get a little more than just a pound of flesh.

No, Blockbuster helped create Netflix by creating demand unserviced by its low choice / high price business model. It's just that once the time came, Netflix didn't mind changing its fundamental business model once greater opportunities presented themselves, and pivoted toward streaming (which has given them a far larger customer base than ever would have been possible with DVDs). By servicing their customers' demand, they're bigger than ever, not sitting around whining for government protection because the world changed around them.

Re:

100% this. I was a Netflix customer before they had streaming services. When they started streaming, broadband penetration wasn't what it is now, and there was debate about whether or not Netflix was making a foolish move.

In fact, Netflix was a bit ahead of the game and are now reaping the rewards.

Hey Comcast, I want to remind you something about doing the same thing and expecting a different result. You didn't compete with video and are losing that market so your new solution is to not compete in the ISP realm? And that's going to work itself out differently why?

Re:

Because on the broadband side the most competition they see across 50% of its footprint are DSL providers who can't offer more than 6 Mbps and don't even really want to be in the fixed-line residential broadband business.

If I did not know any better, I'd say this is a precursor to Comcast filing a civil suit against Netflix since "They helped create Netflix." I'm sure they are entitled to at least 50% of Netflix's profits.

The problem with his final assertions is when he uses the term "our broadband services" he forgets that the customers paid to use the connection as they see fit. This includes using up everything for streaming even if it means some collaborative system that uses upload as well. The customer paid for it. Comcast has no business in how the customer uses the bandwidth.

I read that as a veiled threat: it's OUR broadband, Netflix will have to play by OUR rules.

12 steps

"But as they say, admitting you have a problem is the first step to recovery."

While we're waiting for Comcrash to complete their Greedy Aholes Anonymous program, there are, fortunately for some of us, alternatives to Comcrash. For those stuck in the "Provider X is the only game in town" situations, prepare to feel the full force of the desperate greed.

overages and unlimited usage.

Comcast could give every consumer unlimited data by updating only a small part of their network , where they have built in a way they can claim there is too much traffic to allow unlimited data to all.

The only reason comcast uses caps and overage fees is so they can make more profit. they are increasing prices of packages as much as they can and ignoring competition, but eventually competition is going to catch up, consumers are going to demand a better more stable and unlimited package and refuse to pay £200 for a package where they will be paying overage fees with a few hours of the first day of a billing cycle.

"We at Comcast will not have our reputation sullied by one mans careless comment. What mr. Cohen should have said, reflecting the opinion of Comcast, was: "You are all cheap peasants and dirty pirates! You are all scum that should be paying us forever and for nothing. You suck and we don't. COMCAST RULES!!!".Please disregard Mr. Cohens previous reckless comment.

At the end of the day, Comcast will be looking at the internet connection to pay what the PPV isn't as far as corporation overhead goes. That means the same thing to cable internet prices as what has been seen by cable PPV. The lack of competition will ensure that people do the same with internet as they seek something cheaper to replace the expensively priced internet connection.

Comcast can do what it usually does of offering a PPV at a cut rate for internet customers but I can tell you now, I don't want PPV. Not today, not tomorrow, not next week. I'm tired of the entire broadcast spectrum using programs as the excuse to show commercials. Commercials that should be paying the bills rather than seeing the public gouged twice.